California unemployment rate holds steady at 12.5%

Marc Lifsher

California's unemployment rate in February held steady at 12.5% for a second straight month, indicating that the state's economy may be leveling off and could turn upward by late spring.

But economists warned that even sizable jumps in key activities, such as retail sales, international trade and orders for big-ticket manufactured goods, probably wouldn't lead to a big drop in jobless figures this year.

One sign supporting that forecast came in the state Employment Development Department report released Friday. The number of nonfarm jobs, which grew in January for the first time in several months, fell by 20,400 in February.

"We're building a bottom, but the recovery will be painfully slow for most people," said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto.

That's bad news for out-of-work people like Vernon Crowder, a Fresno economist and banker who was laid off 13 months ago and hasn't found work since.

"There's definitely a lot more economists on the market as banks consolidate," he said. "When there's an opening, there's a landslide of applications."

But some signs of improvement are showing. The state's total labor force, including those looking for jobs, expanded for a second consecutive month -- an indication that Californians are more confident about finding work, said Christopher Thornberg, principal at Beacon Economics, a consulting firm in Los Angeles.

And Levy said there was a good chance that employment reports for the next few months could show a jump in hiring, even though it probably will be a long time before the Golden State returns to the 5% to 6% unemployment rate it enjoyed as recently as three years ago.

According to the state employment agency, California's 12.5% unemployment rate in February mirrored January's figure. A year earlier it was 10.2%. The same trend occurred nationally: Unemployment remained at 9.7% for the first two months of 2010.

California's jobless rate was the fourth highest in the nation, behind Michigan at 14.1%, Nevada at 13.2% and Rhode Island at 12.7%.

Jobless figures for Southern California, not seasonally adjusted, were 14.9% in Riverside County, 14.4% in San Bernardino County, 12.3% in Los Angeles County, 11.1% in Ventura County and 9.7% in Orange County.

The persistently high numbers show that many employers continue to be skittish about expanding their payrolls, preferring to meet increased demand by stepping up the productivity of current workers and by boosting overtime, said Jerry Nickelsburg, a senior economist with the UCLA Anderson Forecast.

"Basically, what we have are indications that California is indeed growing, but employers are still reticent to hire for a number of reasons," he said. "At the core of it, they are still waiting to ascertain that the recovery is taking hold before they commit resources."

Sung Won Sohn, an economics professor at Cal State Channel Islands, is encouraged by some positive signs in many sectors of the state's 15.9-million member civilian workforce. The number of people working in the hard-hit professional and business services area, for instance, rose by 10,000 in February from the previous month.

"As the economy does begin to scrape the bottom and improve, we are seeing more activities in the form of legal, accounting and computer services,"Sohn said. "To me, this is a sign that the economy is beginning to stabilize."

Though small, the professional sector -- which includes lawyers, accountants, architects and economists -- has been pummeled by the recession, more than in any other recent downturn.

An implosion of commercial and residential real estate and efforts by companies to control costs have meant less work for the professions.

In all, professionals lost 89,100 jobs in the last year, a 4.2% drop that was eclipsed only by more drastic contractions in construction, 17.7%; mining and logging, 10.8%; and manufacturing, 7.2%.

"Chief financial officer and controller types, until a year and a half ago, had no problems. They had headhunters calling them," said Crowder, the unemployed banker and economist. Now, "they send out resumes and get no responses."

According to the state agency, employment in some professions had dropped substantially in the three years through the end of December: legal jobs fell by 7.8%, architectural and engineering by 10.9%, and accounting by 14.4%.

The latest recession differs from downturns in the early 1980s and 1990s because it "hits across sectors and across occupations," said employment lawyer Michael Bernick at Sedgwick Detert Moran & Arnold in San Francisco.

"I don't know of any law firm that is hiring people who don't bring new business with them," said Bernick, a former state employment agency director.

Prospects are even tougher for newly minted lawyers, said Darry Sragow, managing partner at Sonnenschein Nath & Rosenthal in Los Angeles. "We don't hire people straight out of school," he said.

But the slowdown and the "large pool of very qualified people looking for work" are also creating opportunities as the economy heals, said Brandi Britton, a senior vice president in Los Angeles for Robert Half International. The company specializes in accounting, finance, administrative, information technology and legal staffing.

Just recently, she said, "the demand for higher-level professionals has started to pick up."